Thanks to an infusion of $470 million from Congress on Tuesday, the Small Business Administration was able to restart its popular 7(a) loan guarantee program, which was shut down earlier this month due to a lack of funding.
The SBA’s program is caught in the middle of some unusually rancorous political haggling over the federal budget, which has left a number of agencies — including the SBA — operating without funding for the fiscal year that began Oct. 1. Without its appropriation, the agency had no choice but to suspend the program. This new infusion of cash keeps the program running at least through Jan. 31.
The SBA oversees loan guarantees for companies that don’t qualify for traditional bank loans. The agency blames the delay on Congress, which has yet to vote on a $373 billion spending bill that includes SBA funding.
The agency had been operating in the meantime under a temporary authority based on 2002 spending levels while requests for SBA loans have were coming in at record rates, as much as $45 million per day, which was way above the funding the agency has for the program, spokesperson Sue Hensley told the Associated Press earlier this month. At that time, the agency took steps to place a $750,000 maximum limit on the loans it would guarantee, which is down from $2 million.
Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders, cited SBA estimates that the 7(a) program created 350,000 jobs last year, Minnesota’s Pioneer Press reported.